Readers' forum: Balancing act

I have a follow-up question to ‘Hanging in the balance’ (query 19 271) and the replies that appeared in Taxation 29 November 2018. The query related to capital allowances on the assets of a sole trader being transferred to a limited company. The assets had a capital allowances pool balance of £20 000 but were worth £30 000. There was a suggestion that the assets might be sold for £1 to create a balancing allowance.

Let’s say that an unincorporated business had assets including freehold premises and was sold for £300 000. If only £1 was allocated to the capital allowances assets to obtain a balancing allowance would the apportionment rules in CAA 2001 s 562 apply automatically in this scenario?

I look forward to hearing from Taxation readers.

Query 19 313– Mrs H.

Reply by Bramble

If s 562 applies an apportionment must be on a just and reasonable basis.

The original query...